CLEVELAND MINING COMPANY LTD 
By
Processing & Infrastructure Development
• Construction of the new jaw crusher and the hammer mill completed as Cleveland transitions to owner-operator operations at Premier. Commissioning successfully completed in the latter part of the Quarter.
• Metallurgical test work on new In-Line Leach Reactor "ILR" system demonstrates exceptional gold recovery rates. ILR purchased and in transit to Brazil after being successfully workshop- commissioned in Australia.
• Limited processing occurred because the commissioning phase extended over most of the
Quarter. 1458 grams of gold doré produced as a by-product of commissioning.
• Modifications to ball mill completed. Mill achieving up to 46.1 tonnes per hour through commissioning, compared to previous 27 tonnes per hour. Grind sizes reduced through installation of the hammer mill into the circuit in place of the cone crusher.
• End to end equipment testing and recommissioning work completed prior to production restarting after the Christmas / New Year break.
Mine Planning
• Premier mine plan developed by AMC Consultants for medium-term open-pit mining finalised in readiness for the resumption of mining in January 2014.
• Mining equipment mobilised to site to allow pre-stripping of areas to be mined in the March
Quarter, 2014.
• Processing of ROM pad low grade ore commencing whilst stripping overburden at Metago pit to begin in January 2014.
Other
• Toll treatment agreement signed with Orinoco Gold, wherein Cleveland would process ore from
Orinoco's nearby projects at the Premier Gold Mine, beginning in March Quarter 2014.
• Results of first-pass mapping and sampling at two projects show good iron grade and prospectivity, motivating the Cleveland/BC Iron Alliance to prepare for drilling.
• BC Iron has provided funding facility for initial drilling campaign beginning in March Quarter,
2014.
• Rick Stroud joins as Non-Executive Director, bringing a wealth of mining and mine engineering experience to Cleveland.
• Extensive discussions with a range of potential financiers to support ongoing development at
Premier and increase working capital.
• Cash at end December was A$575k.
ASX Code: CDG
Total shares: 241.3 million Listed options: 11.4 million Unlisted options: 34.7 million
ContactInvestor & Media Enquiries investors@clevelandmining.com.au
Board of DirectorsNon-Executive Chairman - Russell Scrimshaw Managing Director - David Mendelawitz Executive Director - Rod Campbell
Non-Executive Director - Rick Stroud
Head OfficeSuite 3, Level 1, Rokeby Centre
254 Rokeby Road
Subiaco WA 6008
T: +61 (08) 6389 6000
F: +61 (08) 6389 6099 info@clevelandmining.com.au
Overview
Cleveland Mining Company Ltd. ("Cleveland", ASX: CDG) is pleased to present an update of its activities for the December Quarter, 2013. The two key areas of interest are:
(1) The 50/50 joint venture Premier Gold Mine; and
(2) Iron-ore projects held under a 50/50 joint venture with BC Iron Ltd.
Good progress has been made toward the re-establishment of operations at the Premier Gold Mine. The plan to transition operations from a predominantly contractor-based model to an owner-operator model is now largely complete.
A key milestone of commissioning the front-end crushing circuit was completed, allowing Cleveland to bring 'in house' a key production process that had previously been contracted out. The new fixed plant is being ramped up utilising existing ROM tonnages. The new circuit provides much greater control over the grind size and uniformity of material going into the existing ball mill, reducing the time the material is in the ball mill, effectively increasing the overall capacity of the plant, and reducing costs.
The next operational step-change will come with the installation of the ILR unit, which is en route to Brazil and scheduled to be installed in February 2014. The ILR will increase Cleveland's gold recovery rates from the current ~60% to an anticipated rate of ~75%.
The targeted 75% gold recovery rate is based on studies conducted by the Australian firm Gekko Systems. These studies showed that up to 99% of gold contained in the Premier gravity circuit concentrates (around 75% - 80% of the total gold contained in the ore) could be recovered with relatively short batch times of around 6 hours. Under the existing production system a portion of the gold in the concentrate would not be captured through the gravity table and would be discharged as mineralised waste. The ILR trial showed that virtually all of the gold in the concentrate could now be recovered. The overall recovery target of 75% assumes almost full recovery of concentrate gold, noting that approximately 20% - 25% of the overall contained gold in the mined ore does not get liberated in the concentration process. The longer-term plan for the second half of the 2014 calendar year involves adding a flotation unit to recover more gold in the gravity tailings, boosting recovery to between 90% and 95% of the contained gold.
A further important achievement in the Quarter was the completion of the first stage mine plan to reflect the new owner-operator cost structure and incorporate the conversion of some of the resource from JORC Inferred to Indicated category. Developed over the September and December Quarters, the AMC Consultants mine plan sets out the program for an initial life of mine ("LOM") of around 2 years from the Metago and Pit 3 open pits. As the existing Metago ore body at Premier is open in several directions, it is anticipated that the LOM will be expanded through a new drilling program. Infill drilling around the existing resource and extensional drilling along strike are expected to expand the resource.
Field work will also resume at the nearby Capitão deposit as the Company seeks to increase its resource inventory of higher grade material. Whilst Cleveland has drilled some 44 holes for some
5,606 metres at Capitão, identifying 2 areas of consistent mineralisation, additional infill drilling is required before a JORC-compliant resource can be determined and mining can be accurately scheduled.
A Toll Treatment Agreement with Orinoco Gold Limited (ASX: OGX) was announced during the Quarter. Under the agreement, Orinoco will truck ore to Cleveland's Premier plant, which is approximately 120km away. The first parcel of 500 tonnes of mineralised material is expected to be processed between now and March. Under the agreement, up to 4,000 tonnes of ore is targeted to be processed each month, with both companies believing the potentially high grade Orinoco deposit could become a valuable source of ore.
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Orinoco will contract the process plant at a fixed cost per operational shift for the first 500 tonnes. Further tonnes will be processed against a three-tiered remuneration structure as set out in the agreement, being (1) Cleveland receives a set amount of gold to cover its operational costs; (2) further gold recovered is split 50 / 50 up to an agreed level; and, (3) gold produced above this level is
100% Orinoco's.
With the infrastructure work nearly complete, the focus for the March Quarter 2014 will be the implementation of the AMC mine plan. The first stage allows 6 - 8 weeks for the removal of overburden to expose the ore zones. Under the AMC plan there is a clear mining schedule that targets an initial 19,000 ounces of gold produced from the Metago pit over 20 months whilst other mining areas and extensions to the Metago pit are planned to be defined by additional drilling and planning.
Mining equipment has been mobilised to site and limited operations have commenced. The final hurdles in the implementation of the plan are exchanging the poorly-performing hired excavator with a new unit that the Company has negotiated to acquire, along with raising sufficient funds to facilitate the expansion works program. As discussed below this is expected to be finalised within the very near term and, once done, full-scale mining can be achieved.
Iron ore exploration is being conducted under a joint venture with BC Iron Ltd (ASX: BCI) and is focused on two mineral regions in the Brazilian states of Bahia and Minas Gerais. The first stage of fieldwork for the Caetite project in Bahia was completed over the December Quarter, aiming to cross- check mapping and sampling data supplied by the project vendor. The results were released on 7
January 2014 with a key finding being an average iron content of 34.8% for the surface samples. The rock types and grade were similar to "standard" iron ores in Brazil that are beneficiated into product grades of +60% Fe.
Multiple kilometres of mineralised strike were confirmed in outcrops, providing the basis for a more detailed drilling program that will be conducted over the March 2014 Quarter. The initial funding for Cleveland's share of this program is being provided by BC Iron by way of a line of credit and is likely to amount to around A$400k.
Over the Quarter Cleveland held discussions with a number of potential financiers to supplement its working capital and finance its infrastructure investment program. The successful completion of the AMC mine plan and the establishment of a robust base-case model (released on 29 October 2013), formed the basis of these discussions.
Encouraging interest has been shown in the funding proposal and Cleveland's development plan. The Company is currently in detailed negotiations with a number of groups and is seeking to close a financing arrangement within the near term.
As part of Cleveland's overall focus to resume operations at the Premier Mine, the appointment of Mr Rick Stroud as a Non-Executive Director in October has bolstered the Company's mine engineering expertise. Mr Stroud has a strong background in steering the development and growth of many different mining operations in operational, consulting and executive positions.
Mr Jim Williams retired from the Board in November after being one of the inaugural Non-Executive directors. Cleveland would like to thank Jim for all his efforts and enthusiasm in taking the Company from its early days from listing in 2010 to the current stage of operational ramp up.
- Ends -
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Further Information Mr Rod Campbell Executive Director
+61 8 6389 6000
investors@clevelandmining.com.au
About Cleveland Mining Company Ltd
Cleveland Mining Company Ltd is an Australian-managed, ASX-listed minerals company squarely focused on developing projects into mines.
The Company's management team have a track-record for building billion-dollar projects from the ground up, providing Cleveland with the expertise to secure and build robust projects.
Cleveland has gold and iron ore assets in Brazil in areas with excellent mining credentials:
• Mining and production are underway at Cleveland's Premier 50/50 Gold Mine JV in Goiás State in central Brazil. The Company is working to add throughput from the O Capitão project, which is less than 10km from the Premier Mine.
• Cleveland has formed a strategic alliance with ASX-listed company BC Iron Ltd (ASX: BCI) to co-acquire and co-develop new iron projects in Brazil as joint venture partners. The companies recently signed binding Option Agreements for three Brazilian iron projects.
Cleveland has a different approach to project selection with project economics driving target selection. Projects are chosen according to their likelihood of generating returns at the bottom of the economic cycle.
Forward-looking Statements
Forward-looking statements can be identified by the use of terminology such as 'intend', 'aim',
'project', 'anticipate', 'estimate', 'plan', 'believe', 'expect', 'may', 'should', 'will', 'continue' or similar words. These statements discuss future expectations concerning the results of operations or financial condition, or provide other forward looking statements. They are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this ASX update. Readers are cautioned not to put undue reliance on forward looking statements
Competent Person's Statement
The information in this report that relates to Exploration Results is based on information reviewed by David Mendelawitz, who is a Fellow of the AusIMM. Mr Mendelawitz has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Mendelawitz consents to the inclusion of the matters based on his information in the form and context in which it appears. Mr Mendelawitz is employed by Cleveland Mining Company Ltd.
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Appendix 5B Mining exploration entity quarterly report
Appendix 5B
Mining exploration entity quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10
Name of entity
Cleveland Mining Company Limited
Rule 5.3
ABN Quarter ended ("current quarter")
85 122 711 880 31 December 2013
Consolidated statement of cash flows
Cash flows related to operating activities
1.1 Receipts from product sales and related debtors
1.2 Payments for (a) exploration & evaluation
(b) development
(c) production
(d) administration
1.3 Dividends received
1.4 Interest and other items of a similar nature received
1.5 Interest and other costs of finance paid
1.6 Income taxes paid
1.7 Other (provide details if material)
Net Operating Cash Flows
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 1
Appendix 5B
Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward) | (2,046) | (4,326) |
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other - share issue costs Net financing cash flows | 100 - 1,084 (500) - (3) | 4,214 - 1,084 (1,002) - (213) |
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other - share issue costs Net financing cash flows | 681 | 4,083 |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | (1,365) 1,954 (14) | (243) 845 (27) |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | 575 | 575 |
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities
Current quarter
$A'000
1.23 Aggregate amount of payments to the parties included in item 1.2 141
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
Directors' fees, salaries and superannuation.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
N/A
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
N/A
+ See chapter 19 for defined terms.
Appendix 5B Page 2 17/12/2010
Appendix 5B Mining exploration entity quarterly report
Financing facilities available
Add notes as necessary for an understanding of the position.
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter
4.1 Exploration and evaluation
4.2 Development
4.3 Production *
4.4 Administration
* Excludes expected proceeds from sale of gold, which are expected to exceed production costs for the quarter.
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Changes in interests in mining tenements
6.1 Interests in mining tenements relinquished, reduced or lapsed
6.2 Interests in mining tenements acquired or increased
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 3
Appendix 5B
Mining exploration entity quarterly report
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
7.12 Unsecured notes
+ See chapter 19 for defined terms.
Appendix 5B Page 4 17/12/2010
Compliance statement
Appendix 5B Mining exploration entity quarterly report
1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: 31 January 2014
Company secretary
Print name: Katrina Grose
Notes
1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items
6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
== == == == ==
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 5
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